Ethnicity Pay Gap
Debate between Paul Scully and Bell Ribeiro-Addy(2 years, 7 months ago)
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Paul Scully
As I said at the beginning of my response, I am developing that journey covering the last two years’ worth of work if the hon. Lady will remain patient. The hon. Member for Coatbridge, Chryston and Bellshill (Steven Bonnar) talked about racism, and clearly we need to ensure that we tackle racism in all its forms. However, the Commission on Race and Ethnic Disparities found that most of the disparities when tackling ethnicity pay do not have their origins in racism. There are other factors that may be at play, such as geography, class, sex and age. However, whatever the cause of the pay gap, it is essential that we get organisations to tackle this.
Bell Ribeiro-Addy
The Minister said the issue is not about racism. He also conceded that the data that has been received is not very clear, because a number of different groups are not actually reporting. How can he be so sure that the issue is not racism when the small amount of data he does have shows there is a difference between the pay of ethnic people and their white counterparts?
Paul Scully
I think the hon. Lady is mixing up two things, because the data I talked about was specific to the civil service. It was specifically to make the point that we can read different things out of statistics. What I was quoting about racism is not my view necessarily; it is the view of the report by the Commission on Race and Ethnic Disparities, which was tasked with looking at this and other issues. We are committed to taking action on ethnicity pay reporting, but we want to ensure we are doing the right things to genuinely help move things forward. Determining what it makes sense to report on and what use that data may be put to is key. It is far from straightforward.
The commission’s report and our post-consultation work with businesses and other organisations identify a wide range of technical and data challenges that ethnicity pay reporting brings. First, there is the challenge of statistical robustness. In 2019, the Royal Statistical Society argued for a minimum sample size per category of at least 100 to draw valid conclusions. Its purpose was to ensure that the calculation of a pay-gap statistic would be reasonably reliable when interpreted by non-statisticians, who would not likely be able to appreciate or measure the extent to which the statistic is affected by random chance.
The second challenge, as we have heard by my hon. Friend the Member for Carshalton and Wallington, is anonymity. It should never be possible to identify any individual from ethnicity pay-gap analysis. That means a sample size must be large enough so that it is not possible to link a number of individuals of the same ethnicity to a particular pay band. The third challenge is data collection and business burdens. A study of more than 100 organisations by PwC in August 2020 found that almost 35% did not collect any ethnicity data, with half identifying legal and GDPR requirements as barriers to collecting the data. Among the organisations that did collect data, around half said they would be unable to publish their ethnicity pay data due to poor or insufficient data driven by low response rates.
Fourthly, there is reporting on a binary basis. One way to mitigate low employee declaration rates is to combine all individuals from an ethnic minority background into a single group for reporting purposes. However, such an approach risks masking the significant variations in labour market outcomes between groups and therefore the relevance of any action plan. Finally, there is the challenge of skewed results. Reporting at a more granular level risks results being skewed by particularly large or small pay values because of low numbers of particular ethnic groups. If an employer with 300 people employs black individuals in the same proportion as the wider population—3% of England and Wales’ working population is black according to the Office for National Statistics—then their average pay would be calculated from just 9 individuals, and that assumes 100% declaration rates.
The uneven geographical distribution of specific ethnic groups complicates the issues further. In Wales, only 0.7% of the working-age population is black. It is therefore much harder to produce reliable and actionable statistics from relatively few data points. All this create complex challenges when deciding how best to take forward ethnicity pay reporting, but the Government are determined to take steps to help employers tackle race and ethnic disparities in the workplace. I think we would all agree that key to this endeavour is obtaining a good understanding of the issues that may be driving the disparities and, most importantly, developing meaningful action plans, based on that understanding. The Ruby McGregor-Smith report, the Government’s consultation on ethnicity pay reporting, and the commission’s work all make an important contribution to both the national conversation about race and the Government’s efforts to level up and unite the whole country.
The Government are now considering in detail what we have learned from the consultation on ethnicity and pay, our further work and the commission’s report. We are assessing the next steps for future Government policy, and we will set out a response in due course. Once again, I thank hon. Members who have contributed to the debate. It has been a valuable discussion.
Oral Answers to Questions
Debate between Paul Scully and Bell Ribeiro-Addy(2 years, 10 months ago)
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Bell Ribeiro-Addy (Streatham) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
The recent Uber Supreme Court judgment upheld the law that those who qualify as workers in the gig economy are entitled to the same employment rights and protections as workers in other parts of the economy. The Government have one of the best records on employment rights in the world, and we have just increased wages again for the UK’s lowest paid workers.
Bell Ribeiro-Addy[V]
According to the McKinsey Global Institute, 5 million people in the UK work in the gig economy, which is around 15.6% of the UK’s total full and part-time workforce. That is 5 million people without legal rights to statutory sick pay, holiday pay, redundancy pay, maternity leave or minimum wage. February’s Supreme Court ruling in favour of Uber drivers was a momentous step forward for gig economy workers. In the same month, however, the Minister for Small Business, Labour Markets and Consumers refused to back Labour’s call to enshrine this in law, so I ask the Minister again for the sake of the millions of gig economy workers, will the Government finally step up and enshrine the rights of gig economy workers in law ?
Paul Scully
Employment law is clear that an individual’s employment rights are determined by their employment status, which in turn is determined by the detail of their working arrangement. Government actively encourage businesses to ensure that they are adhering to their legal obligations and that individuals are treated fairly and in accordance with the law.